What are ERP Software? Pros and Cons of ERP Softwares


What are ERP software

Every organization uses various softwares to keep on track and to grow their businesses. One of the most common software they use is ERP software. ERP software commonly includes some tools that can simplify their work. Some of these tools are project management tools, financial management tools, human resources management, CRM, Reporting & analytics tools, collaboration & communication tools, and more.

But what actually are ERP softwares and how do these softwares help organizations grow in this competitive world? To find out, let's read more.

What are ERP Software?

ERP is also known as Enterprise Resource Planning. It helps organizations to manage and grow their business with the help of various management tools such as finance management, HR management, supply chain, customer relationship management, and more.

ERP softwares typically include a suite of integrated tools and modules for managing various tasks, streamlining workflows as well as automating business processes. It simplifies business operations and helps employees in making decisions.

ERP Software Modules

Enterprise Resource Planning softwares usually store an organization's data in a centralized database, which is easily accessible, and can be analyzed by authorized users from any remote location.

After all, ERP softwares are developed to improve efficiency, productivity, and profitability while managing business operations, collaborations, communications, reports & analytics.


Pros and Cons of ERP Software



Increased efficiency and productivity

High cost

Improved visibility and reporting


Better collaboration and communication

Extensive training and adoption required

Enhanced customer service

Security and data privacy concerns

Scalability and flexibility

Integration challenges

Improved supply chain management

Limited flexibility

Streamlined financial management

Disruption to business operations during implementation

Better inventory management

Risk of vendor lock-in

Reduced operational costs

Lack of customization options

Increased data accuracy and consistency

Difficulty in measuring ROI

How Does ERP Software Work?

ERP (Enterprise Resource Planning) softwares usually works by integrating different tools and automating business processes that are backed by centralized data storage. These softwares usually include different steps such as planning & analysis, implementation, integration, data management, automation, reporting & analysis, collaboration, and continuous improvement. By following these steps, organizations achieve their goals, and so businesses grow.

Also Read: Best Project Management Software

Types of ERP Software: Cloud vs On-Premise ERP Software

Enterprise Resource Planning software can be classified into two groups: Cloud-based, and On-Premise ERP software. Here's how they are different from each other:

Types of ERP Software

Cloud-based ERP Software: Cloud-based ERP software is also known as SaaS (Software-as-a-service). These types of softwares are hosted on vendor's servers and can be accessed through the internet. In fact, the vendor is responsible for maintaining the application including software updates, security, backup, etc.

On-Premise ERP Software: This type of software is desktop-based software that is installed, and run on the organization's servers. In this ERP software, your own organization is responsible for maintaining and updating the software. Your organization is the only responsible entity for securing the data and backups. Although on-premise ERP softwares are costlier than cloud-based softwares, it is best suited for big organizations with dedicated IT teams.


As a result, ERP softwares are complex software solutions that integrate multiple tools and automate business processes and data across organizations. It manages various functions by acting as a centralized platform. These functions include inventory management, financial management, customer relationship management, and supply chain management. Of all these benefits of ERP software, it also has some drawbacks such as high cost, complexity, complex training, limited flexibility, difficulty in measuring ROI, etc.

Thus, it is required for organizations to verify their specific needs, and research before selecting an ERP software that is best suitable for their requirements so that they could achieve goals and become successful in a short time.

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